Digboi refinery plans foray into exploration

DIGBOI, March 23: The centurion Digboi refinery, which is Asia's oldest working petroleum refinery, and which forms the Assam Oil Division of Indian Oil Corporation Limited, plans to go in to the lucrative exploration and production of crude in its second century of existence. The refinery, which went on stream in 1901, has been chiefly what its name suggests: its refines crude and since 1902, has been marketing its end products. The logic being that "crude sells easily while products needs marketing." The Digboi refinery, as most would know, was part of the Burmah Oil Company till 1981when it was merged with the Indian Oil Corporation and ever since, is known as the Assam Oil Division of IOC. With nationalisation of the entity that year, crude production activities of the erstwhile Assam Oil Company were transferred to Oil India Limited, which was also partly owned by the Burmah Oil Company. With the Assam Accord signed on August 15, 1985, work began on the establishment of the 3 million tonnes per annum capacity Numaligarh Refinery. This effectively stifled expansion plans of the Digboi Refinery, and the latter then decided to retain the refining capacity, for the time being, and instead go in for value addition. With this started a work schedule, whereby old refining and distillation plants were to be dismantled and new, hi-tech equipment installed, as part of an ambitious modernisation drive, all pegged to cost a whopping Rs 1,700 crore. Once the entire modernisation works are complete, the refining capacity of the refinery would go up from the current .65 million ton per annum to 1 million ton per annum. As the old give in to the new, archaic yet functional equipment are being condemned to the junk yard, causing considerable heart-burn among the older sections of the workers, most of whom almost grew up on these labour-intensive machines. It was a sight to see the workers manually spading out wax sheets from the was distillers. This section too is being modernised, and in the coming months, the place is likely to look much cleaner as well reduced number of personnel on the machines. For everything would then be fully logic controlled from computerised, air conditioned control rooms with process control equipment. On value addition, the current thrust is on improving the quality of diesel, to meet present day environmental norms. With the commissioning of the Kero Diesel Hydrotreater plant, the high speed diesel (HSD) produced here would meet even the stringent California emission norms, with less than .05 per cent sulphur content, said Barun Bhattacharyya, deputy general manager, technical services at the refinery here. He too stresses that to make up for limited capacity enhancement, the choice is limited to value addition. The other value addition works are in the bitumen plant, where superior grade bitumen would be produced, in collaboration with a German firm. The Executive Director of the refinery here, Amarendra Nath Das, said the available technology is such that the quality control can be maintained in the new bitumen from Germany, via a wide area network and satellite communication. Digboi refinery is noted in the industry for its wax. Presently, the refinery produces 30,000 tonnes of wax in three grades - Type I, Type II and Type III - all of which is lapped up by the market the moment this is rolled out from the mould assembly lines. These fetch the refinery a good price too, and is one of the financial anchors of Assam Oil Division. The plan hence is to hike this production level to 60,000 tonnes per annum and thus double the profitability of the institution. Das said: "Digboi refinery, as a stand alone unit, is a viable firm, but we would like to make some profits." Of the three grades of waxes made at the refinery here, Type-I is food grade, and is used in biscuit and bakery packaging. The Type II is used for candle making after the quality has been diluted by the candle makers. The Type III wax is yellowish in colour-the other two are white-and is used for industrial purposes. Speaking to a group of invited media personnel here today, the refinery's general manager (technical), B R Sarmah said the refinery is proud to have the ISO 9002 and ISO 14001 certifications for quality of process and products, but added that he and his colleagues are not resting on these laurels. He adds that the quest for better quality is a continuing process. Given all these, the fact at the end of the day remains that to remain afloat as a viable and profit making organisation, diversification prospects have to be looked into, while consolidation of the existing product range must not be lost sight of. Herein lies the compulsion to go into exploration and production of crude oil, increase sales, value addition of products and go in for more economical transportation. On the transportation front, utilisation of riverways is being looked into. For exploration and production of crude oil, an 'unregistered joint venture' is being worked out with the UK-based Premier Oil. Moreover, AOD is also venturing out of the Northeast to sell its produce. It has already established itself in Haryana, Bihar, Orissa and West Bengal. Its marketing department now plans to open AOD retail outlets in several other states, including Delhi and Andhra Pradesh. To further consolidate its lead in LPG market share (the company has 60 per cent market share of the region's LPG bazaar), the company is setting up six more LPG bottling plants throughout the region. These would supplement the LPG bottling capacity in its existing plants at Borkola, Silchar and North Guwahati. For a hundred year old, newer lessons never come late.